Real estate. How can micro data registers improve the estimates of real estate in the national accounts?

1. Real estate
How can micro data registers improve the
estimates of real estate in the national
accounts?
Nordisk Statistikermøde 2013
Christian Gysting
Gitte Frej Knudsen

2.  Market value of real assets
 Registers specified on individual level
 Actual sales on the market
Household Wealth Project
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Main results (aggregated micro data)
Billion DKK (current prices) 2004 2005 2006 2007 2008 2009 2010
Owner occupied dwellings 2.446 2.837 3.107 3.913 4.005 3.534 3.476
Co-operative dwellings 134 152 253 228 244 228 2281
Housing assets, total 2.580 2.989 3.361 4.141 4.249 3.762 3.704
Housing assets, % of GDP 176 193 206 245 242 226 211
Household cars 132 188
Yachts 10
Aircrafts owned by households 1
Real assets, total 4.443
Note: Market values ​​of co-operative dwellings have not yet been calculated for 2010

3. Share of households’ real assets
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Housing assets
95,5 percent
Household cars
4,2 percent
Yachts and aircrafts
0,3 percent

4. Owner occupied dwellings
Linkage of variables from four registers in DST:
 Official real estate valuations
 Types of property
 Geographic dimensions
 Real estate sales
 Owners
 Owner share
Aggregated micro data
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Market value at micro level:
Market value = Official real estate value * market value coefficient

5. Official real
estate valuation
• Real estate no.
• Official real estate valuation
• Types of property
Buildings and
land
• Real estate no.
• Geographic dimensions
Real estate
sales
• Real estate no.
• Actual sale values
Owners of real
estate
• Real estate no.
• Personal ID no.
• Business register no.
• Owner share
Register with market value for owner
occupied dwellings
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6. Estimation of market value coefficients
Relating actual sale values to official real estate valuations
k is a geographical area, e.g. a postal code
j is an owner occupied dwelling (type j),
traded in the geographical area k




 J
J
kj
J
J
kj
k
1
,
1
,
)valuationestaterealOfficial(
)valuessale(
tcoefficienueMarket val

7. Market value from national accounts and
aggregated micro data
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0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
4 500
2004 2005 2006 2007 2008 2009 2010
Owner occupied dwellings (aggregated micro data)
Buildings (owner occupied dwellings, national accounts)
BillionDKK

8. 1. The calculated combined value for owner occupied
dwellings (from the Household Wealth Project) is
the first step if the aim is to compile complete
balance sheets.
2. Calculation of additional combined values required
for rented residential buildings, non-residential
buildings, structures and undeveloped land.
3. Separation of the combined value into a building
component and a land component. Our document
suggest 2 different approaches: The residual
approach and the hedonic approach.
Complete balance sheets
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9. • The residual approach makes use of a simple
identity: Land (L) = Total (T) – Buildings (B).
• Value of owner occupied dwellings (B) normally known
from capital stock estimations (PIM).
• Market value (combined value of land and buildings) for
owner occupied dwellings (T) known from The
Household Wealth Project.
• Probably the most used approach for valuating land
by national statistical offices. Most countries already
have PIM estimates for buildings (dwellings).
Possibility no. 1: Residual approach
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10.  Hedonic approach makes use of a regression
model. In the most simplistic form given by:
𝑌𝑖 = 𝛽1 𝑥1,𝑖 + 𝛽2 𝑥2,𝑖 + 𝜀𝑖.
Yi=Actual sales price for real property, observation no. i
𝛽1 = Price per square meter of buildings,
x1,i=Number of square meters of buildings, observation no. i,
𝛽2 = Price per square meter of land
x2,i=Number of square meters of land, observation no. i
• Output of the regression model: Average price
per square meter of buildings (𝛽1) and average
price per square meter of land (𝛽2).
Possibility no. 2: Hedonics approach
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11.  Residual approach:
• Consistent with Capital
Stock estimates from
The National Accounts.
• Most of the revaluation
attributed towards the
land component.
• Risk of negative values
for land.
Advantages / Disadvantages
• Hedonic approach:
• Data intensive and
technical advanced.
• Not implemented in
practice in national
accounts.
• Consistent use of market
prices and square meters
for buildings and land.
• Figures not necessary
consistent with Capital
Stock figures.
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12.  The Household Wealth Project represents a crucial step on
the road towards complete balance sheets for Denmark.
Additional calculation of some components required.
 The next step is to compile values for the land component. If
possible, in complete consistency with already compiled
values for the Capital Stock of buildings. Or if required, with
adjusted values for the Capital Stock of buildings.
 Our document suggests 2 methods for separating the
combined value into a land component and a building
component: The Residual Approach and The Hedonic
Approach.
Conclusion
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